This opinion is from Doug Hoffer, a policy analyst who lives in Burlington.
New data from the IRS provides a stark reminder of why the federal and state governments have less to spend these days. The data shows the income and effective tax rates for the Top 400 American households. Note: The IRS first started publishing the data during the Clinton presidency but the Bush administration shut it down. It is now available again.
The average income of the Top 400 was $344.8 million in 2007. Adjusted for 2009 dollars, this is a 399% increase from 1992 when the Top 400’s average income was only $71.5 million. [Note: This is not wealth or assets; just single year earnings.] During the same period, the inflation adjusted average income of the bottom 90% grew a whopping 13%.
At the same time, the Top 400 saw their effective tax rates decline by 37% (from 26.38% to 16.62%). So on total income of $138 billion (remember, this is only 400 households), this group paid about $23 billion in taxes. Had they paid at the 1992 rate, it would have been $36 billion. That’s a loss of $13 billion from just those 400 households; in one year.
Is it any wonder governments are starved for money?
And note that while this trend was unfolding, many right-wing Americans came to believe that their government was essentially confiscatory. Furthermore, this massive shift occurred at the same time millions of American jobs were sent overseas. Go figure.
I encourage you to keep this in mind when Jim Douglas and Brian Dubie call for the reintroduction of the 40 percent capital gains exclusion as they cut programs for poor people.
